The October 10 issue of The Economist includes a special report on the impact of covid-19 on the global economy, with eight article on the subject. “The pandemic has caused the world’s economies to diverge,” notes the issue’s overview article. “But its long-term impact will be even more far-reaching… huge gaps between the performance of countries are opening up - which could yet recast the world’s economic order.”
According to the OECD, whereas China’s economy is expected to be 10% larger by the end of 2021 than it was in pre-pandemic 2019, the US economy will be essentially the same size, while the economies of the Euro area, the UK, Japan and South Korea will see a decline by the end of 2021 compared to their pre-pandemic levels.
“The covid-19 pandemic will accelerate change in the world economy,” says The Economist. It’s becoming increasingly clear that “the pandemic will lead to immense structural changes in the global economy: less globalized, more digitized, and less equal.” Supply chains will bring production closer to home to cut risks. Office workers will continue to work from their homes for at least part of the week. Lower paid urban service workers will face unemployment and need to find new jobs. The gulf between Wall Street and Main Street will widen. “The challenge for democratic governments will be to adapt to all these changes while maintaining popular consent for their policies and for free markets.”
Let me discuss the three key areas where The Economist expects long-lasting changes: globalization, digitization and inequality.
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